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Your Money

News/Business. A break down the financial news of the week.

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CNN

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00:30:00

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Annapolis, MD, USA

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Comcast Cable

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Port 1234

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mpeg2video

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mp2

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720

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480

TOPIC FREQUENCY

Bangladesh 10, Washington 8, U.s. 5, Sears 5, America 4, Abercrombie 2, Barack Obama 2, Ron 2, Fitch 1, Tommy Hilfiger 1, Kline 1, J.c. Penney 1, Benton 1, Facebook 1, Lewinski 1, Richard Nixon 1, Baching 1, Rushma 1, Greg 1, Nixon 1,
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  CNN    Your Money    News/Business. A break down  
   the financial news of the week.  

    May 18, 2013
    2:00 - 2:29pm EDT  

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or lack there of and ton sills and everything. hard to believe the camera survived. even after the tragedy at a clothing factory in bangladesh, in u.s. retailers are opting out of a pact to increase safety standards for workers. christine romans is naming the names next on "your money." the president probably wishes he was talking about your job, your money, your prosperity. this is "your money." president obama wants to steer the conversation towards his policy goals and the smell of scandal is getting stronger in washington. >> the white house, knocked off message by a rash of bad headlines. the irs allegedly targets conservative groups. the government is spying on ap reporters and new details about the deadly raid in benghazi. conservatives seize the moment. >> my question is who is going to jail over this scandal? >> we have got to restore the trust in government. >> i have never seen anything
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quite like this except in the past during the nixon years. >> the watergate scandal forced president nixon to resign but do these rise to that level? review. president clinton had two scandals, white water and monica lewinski. franklin and grant were arrested while in office. yes, it was a bad week for the white house politically. maybe the worst of obama's second term. will it derail his legacy? after all, he promised to help us prosper. >> we believe that america's prosperity must rest upon the broad shoulders of a rising middle class. we know that america thrives when every person can find independence and pride in their work. when the wages of honest labor liberate family from the brink of hardship. >> this white house is stuck in crisis management, not legacy building. for now. >> the chief political strategist at potomac research
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group and the editorial director of the national journal, gentlemen, welcome to the program. greg, it is not off i get to see teapot dome scandal on television. we're trying to put this in perspective. really trying to put this really into perspective. you say the scandals could push democrats away from the president this summer. put it in perspective for me. how does it hurt our economic recovery or does it matter? >> i think it is going to hurt barack obama's ability to spin a pretty good story with the economy improving, with the budget deficit plunging, and i think that would be a slight negative for him. as you mentioned at the beginning, i think that one thing that is a little bit like watergate is that republicans started to flee from richard nixon. i am going to be watching democrats in the next few weeks to see if they start to peel away from barack obama. >> ron, what's the move here for republicans? >> on the one hand there is no
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question that this confluence of scandals, particularly the irs issue is going to help them mobilize their base for 2014. historically if you look back, particularly at the clinton years, the effect of scandal is to empower the hard line in each party, obama is going to find a tougher i think to make deals that may alienate some of the congressional democrats while he needs them to defend them against the republicans and on the other side voices get louder inside the gop that say the president is bleeding, we don't want to throw him lifelines with any agreements and that could be a shortsighted view for the republicans. it makes it harder to get immigration and the net may not be a positive by 2016. >> and i want to talk about the obama economy. this is what it looks like now, the labor force participation right 63.3 pretax, income up 2% in the past year, 5% over the past two years, overall the economy grew just 2.5% in the first three months of the year, but deficits dropping, plunged 32% in the first half of the
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fiscal year. housing improving. prices are rising in most areas. consumer confidence we learned is almost at a six-year high. stocks, i don't have to tell you, most of those people in washington have a 401(k) and very well aware what's happening in the stock market. here is my question. ron, i want ron to answer this. here you've got republicans who can be focusing on other things and not the things going in the president's direction. >> right. absolutely. it gives them an opportunity to kind of take the political offensive and as i said to mobilize their base. there is an opportunity. there is a desire in the public to see things get done, particularly on the deficit, the debt, economic growth, those kind of issues, and to the extent focusing solely on this, there is cost. politically, your numbers, it is a fascinating sub current here which is at the groups at the core of this new obama coalition, minorities, young
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people, are having the toughest time in this economy. you wonder how long they can levitate above that. if things tonight get better by 2016, can they hold the overwhelming support. >> the debt ceiling fight t makes me sick to remember about it and it cost america the aaa credit rating. the treasury using extraordinary measures to help the country pay its bills. how does this play out? we have seen this before. how does it play out this time? >> we don't have to fight the fight until november. i think the chance of another down grade is remote because of the spectacular progress on the deficit. here is the interesting angle to me. it is not that obama's agenda is in at that time in tatteres is, it was months ago. i think what may has been, the things he doesn't want may get shoved down his throat, keystone
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pipeline and maybe another sequester n november he may have to accept sequester for 2014. >> slowly healing jobs market and plunging deficit mean there is a lot of other things, scandal things talking about in washington. if we were talking about those things, i can assure you democrats would be talking about the other two. thanks, guys. >> coming up. u 8
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partisanship and the inability of our elected leaders to put our prosperity ahead of politics paralyzed washington and that paralysis brought us debt debacles, sequesters, fiscal cliffs and it has gotten so bad olympia snow decided last year she could serve no more. she has a new book fighting for common ground, a memoir of her career. when i sat down with her i asked
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her point-blank what is wrong with these people in washington? we're a can-do country and the failure in washington now is to talk about the politics, the next election and nothing but policies advancing this country's interests over the political interests of the next election or one's political position. >> will we see moderates become extinct? >> it is moving in that direction. i hope not. i hope that there is some way that we can avert it. i have encouraged people to get involved, speak up, just as those who have fanned the flames of polarization, they can use the social media to organize, to protest, to demand that people are held accountable and to do their jobs in washington and come up with results. >> you talk about the socially conservative wing of your party that has really swayed republicans.
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>> it is true. i think that the unfortunate dimension of the republican party today has been one of intolerance, diverse views within the party. i don't know how the party expands if, one, they don't change their positions and their views on issues that will appeal to a broader segment of the population, but if you're not tolerant of individuals who have different views within the party, how can you appeal to those outside of the party? >> there are actually people that say bipartisanship is a bad thing. >> biggest economy in the world, the greatest nation on earth, and we can't manage to pass a budget in the united states congress. in the senate we're in the fourth year. we finally -- the senate passed a budget this year, budget resolution, and the house and senate haven't gotten together. it is required by law. >> is congress breaking the law. >> budget resolutions are supposed to pass and become law by april 15th. >> the only leadership is the fed chairman and he is pumping
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85 million a month into the economy. >> i don't think he has any choice. there are disagreement. they about the implications. >> he doesn't have another choice. >> he doesn't. there is no fiscal policy. there is no budget. theres no management in congress and the president. there is no debt reduction plan. he has begsed congress. he has argued because he doesn't want to be in this position. to have zero interest rates for this long and into 2014, and he has said he doesn't feel comfortable drawing down. i mean, raising interest rates or pulling out for purchasing these bonds on a monthly basis because of the unemployment rate. he understands. the only way it can turn around is for congress to collaborate and get is done. there is no other way and there is no other choice. >> coming up most u.s. retailers probably hope you will forget the teenaged girl trapped for 17
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days in a factory building in bangladesh. >> i heard the sounds of voices and i wondered where is the sound coming from? >> question. will you remember her face the next time you shop for clothes? [ female announcer ] the only patch for the treatment of mild to moderate alzheimer's disease is exelon patch. now with more treatment options, exelon patch may improve overall function and cognition. your loved one can get a free 30-day trial. and you can have access to nurses. it does not change how the disease progresses. hospitalization, and rarely death, have been reported from wearing more than one patch at a time. the most common side effects are nausea, vomiting, diarrhea, fall, loss of appetite or weight, application site redness, and urinary tract infection. the likelihood and severity of these side effects may increase as the dose increases or if patients weigh less than 110 pounds. people at risk for stomach ulcers who take certain other medicines should talk to their doctor as serious stomach problems such as bleeding may worsen. patients may experience slow heart rate.
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i want to introduce you to a woman named rushma. maybe you heard her speak and maybe you heard her story. we won't forget it here. last week recovery workers pulled the 19-year-old woman from the rubble of a collapsed garment factory in bangladesh. she had been buried underneath the debris for 17 days. cracks in the building had previously been detected and she says no one told her it was unsafe. >> no. >> no warning. >> translator: no one told me. everyone was looking to see which parts are cracked and i went in and see there is a wall where a little is cracked. the managers said it is water damage and you can work. >> more than 1,100 people were killed when that building crumbled to ground.
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they made clothes for ones very likely hanging in your closet. u.s. companies have an opportunity. they can make garment producing safer and they're baching. more than two dozen european clothing companies agreed to a five year legally binding safety agreement that requires independent inspections and safety upgrades. only two american companies have signed on. abercrombie and fitch and pvh, the maker of cal vine kline, tommy hilfiger and izod. the rest says no thanks. walmart says it is hiring its own inspectors and will make the results public. companies like walmart don't want to lose control of the supply chain or the inspection process. i am here to tell you they already have. walmart just found out a year ago a supplier used one of the factories inside that collapsed building to produce jeans. before this devastating collapse it had no idea production happened there, and this is not the first time walmart has been caught unaware. gaap has a different reason for not signing on.
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it is worried about legal exposure. gap doesn't want to end up dragged into court and potentially liable if there is another preventible tragedy in bangladesh and other companies aren't offering much reason at all. here is the statement we got from sears. sears intends to continue participating in discussions on the accord as updates are made and more information is available but is not prepared to sign the current proposal as it is written today. this goes on like this for 18 more words. before ending with this. meanwhile, we will continue on going efforts to work collaboratively with other brands and retailers to improve working conditions in bangladesh. 71 words in all. to essentially say it is status quo for sears in bangladesh. we invited all companies to come to talk to us on camera. sears, walmart, target, j.c. penney, gap, and all declined or didn't respond to the request. the national retail federation declined as well. we have the ceo of telsey advisory group covering retailers and their business for
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years and dara the professor of environmental and labor policy at university of california berkeley. multi billion dollar businesses have made a ton of money chasing the cheapest labor. walmart made $17 billion last year. target made $3 billion. gap more than a billion. how can a company that knows everything about me at the point of purchase, exactly what i am doing, how can they not know where their jeans are being stitched? >> i think one of the things that happens with these companies, very large companies. they are subcontracting out some of the garments they make and could go from an agent to a subcontractor. certainly the agents, there is lots of legal issues and lots of legal stipulations in the contract about worker safety. even saying that, worker safety can be enhanced by all. >> how can walmart or sears or they say we'll do our own inspections if they don't know where it is being made? that's what i don't understand. >> what's happening, sometimes
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if this happened and through one of the agents they take it back themselves and higher costs to do it themselves and put the inspections in themselves and they do value the safety of the workers that the garments are being produced at. >> a lot of people are asking do they value the safety of the workers more or less than they value the low input costs of making that garment? >> i think you assume it is not being made with slave labor. the european trade commissioner said this is slave labor in bangladesh. do american consumers, dara, do they make the assumption or not care? >> no, i think american consumers do care when they learn, when they know, when these types of tragedies occur and becomes kind of front and center and connects us from the stylish, quality, low price garments we think we're buying with the reality of these supply chains and the reality of bangladesh which as you point out lowest apparel wages in the
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world, horrendous conditions, infrastructure conditions, that when they see it, i think they are shocked and i think they really do care, but what you just point out is this is a system that has been set up for the outsourcing of production and quite frankly the outsourcing of responsibility. this is not an accident that walmart doesn't know whether these factories are producing their goods. this is part of a system of pushing down prices, speeding up delivery times, so that the industry can drive what they call fast fashion. that is stylish products changing very quickly at reasonable quality but at low prices in the stores. so this really is an industry problem driven by the brands and the retailers and really a situation where the u.s. brands and retailers are shirking their responsibility. >> are they or let me ask, i have been very closely watching and no one is going on camera for me. i have been closely reading these long pr department written statements, policy statements they have and this is a lot of we want to continue the on going
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dialog. you know, many people, myself included, say that dialog should have happened before a bunch of people died, right? you should already have a grapple, an idea of what's happening in your factories. could it really be that gap and walmart and others, maybe they don't like the european deal and there will be some sort of north american deal that will make things safer? >> so the north american retailers came together and made an announcement this week which you probably already read which was a four-page press release rather than a plan for safety in bangladesh. if one of my under graduate students had turned that plan into me i would give it an f. it was so vague, not committal and filled with platitudes with no detail what they will do. it is a program of voluntary self monitoring with no binding and no enforceable agreements and this is what the gap is saying. the code word, we don't want liability. the real thing, they don't want responsibility. they want flexibility, what the
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americana peril and footwear said. they want flexibility. they don't want to commit to the real solution, a binding and enforceable agreement that would involve them committing to contracts, not cutting and running, not voluntary auditing which has failed over the last ten years but committing for the next five years to actually commit to improving conditions in bangladesh. >> let me bring dana back in. the issue here is do they have a responsibility? the responsibility is to the shareholders, right? if there is a public outcry that's big enough, do shareholders start to say, hey, you have to do a better job. you can't just let people subcontract and subcontract and subcontract, it is bad press. >> i think you have seen retailers over the past few years and frankly eep the past few decades enhance their operations whether it comes from the systems side, whether it comes from labor and payroll costs. >> i think they got it in the u.s. i think the agents part of the business given how much so many of them use the subcontractors and agents, i think now it is
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going to come onto a new level and i think you will see retailers address the issue. >> do they know? do the retailers know when they are signing the contracts, do they everyone there is not a lot of transparency and so much corruption with the local governments? do they close their eyes and hope for the best? >> i think you have seen retailers over the past few years, you name tons of different countries they diversified into and many of the different annual reports and discussions that the ceos talk about is here is how we diversified our sourcing and they can be able to know more about what is being produced in each country so they're not solely dependent. >> bottom line, the american consumer pull back? >> bottom line, they don't pull back. if there is something new they to want wear, they'll keep buying it. >> i would absolutely say the american consumer shopping at the gap, abercrombie, benton, they're not searching for the cheapest garments.
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they're searching for stylish, quality garments at a good price. he this are willing to pay more. they will pay more. we're talking 25 cents for to cover the cost of renovation and improving the buildings. american consumers will pay when they know and they will punish the brands that don't sign. >> we'll watch. thank you. have a great weekend. up next, the have and have-nots and the bull market run.
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it is easy to look back and say you should have jumped in but others of you are still struggling now. the job is the most important thing for you, not the stock market rally. another example, facebook's one year anniversary as a public company, remember all of that incredible hype? retail investors dying to get in, thinking this was their chance to prosper, the little guy going to get a piece of a big company and make their fortune? it plunged and still down 30% from the initial offering price. you have every reason to be skeptical when they tell you the only way to make money is get in the stock market. it is a reminder there are no guarantees and we're living in one america with two economies. thank you for joining the conversation this week. we're here every saturday. sunday at 3 p.m. until then find me on facebook and twitter. come willing up on the next list, can you teach